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To: Les H who wrote (591)	9/4/2001 9:34:34 AM
From: Les H	Read Replies (1) \| Respond to of 29596

MARKET EARNINGS The good news was that the S&P500 earnings estimates for 3Q01 and 4Q01 did not drop much last week. The expected decline for 3Q01 dropped from 14.0% to 14.2%, while the expected decline for 4Q01 went from 1.7% to 2.1%. The bad news was that the reason was that no one was around. It may have been a seasonally slow period for pre-announcements, but the 19 warnings last week were enough to keep the warnings pace slightly ahead of the record setting pace of 1Q01. At the equivalent time, warnings in 1Q01 were 370 compared to the current 377 for 3Q01. Although the pre-announcement season does not normally gear up until mid-September, there may be some excuses to generate some this week. All the August data coming from the companies in the retailing, auto, homebuilding, airline, and hotel industries is one source. The other is the broker sponsored conferences in technology, retailing, and consumer products. Fasten your seatbelts. If it turns out they weren’t necessary this week, they most likely will be for the rest of the month. The earnings decline gap continues to widen between big and small caps. While expectations for 3Q01 S&P500 earnings dropped only 0.2 percentage points last week, the drop was 1.1 percentage points for the S&P600. Similarly, the drop for 4Q01 was 0.4 percentage points for the S&P500 and 0.8 percentage points for the S&P600. S&P600 earnings expectations for 3Q01 now stands at a 19.9% decline, and for 4Q01 now stands at a 5.7% decline. Tech expectations continue in free fall. Since 1 July, the 3Q01 earnings expectations for tech have gone from a 49% decline to a 67% decline for the S&P500, and from a 69% decline to a 100% decline (i.e. breakeven) for the S&P600. For 4Q01, the S&P500 tech sector expectations dropped from a 34% decline to a 42% decline, while the drop was from a 38% decline to a 74% decline for the S&P600 tech sector. Most ominous is the continued slashing of tech (and basic materials) sector earnings for 1Q02. more at www1.firstcall.com\|market